You work for Segway, in the sales division of the Drift W1 (which are basically motorized roller skates). Youâve traveled into the future (since they arenât available yet) and collected data on monthly sales (S) and the price of the Drift W1 (P), both in dollars, as well as the daily average summer temperature in your most popular market (T) in degrees Fahrenheit. You estimate the following regression model: S=a+bP+cT In your regressions, you usually look for a 10%-or-better level of confidence.
The expected sign of
Select one:
a. b is negative and c is positive.
b. b is negative and c is negative.
c. b is positive and c is positive.
d. b is positive and c is negative.
Your regression yields the following results:
Dep. Var.: S
Adj. R-square 0.820
Variable Coefficient Standard Error t-stat P-value Intercept 1936 309 6.259 0.00153 P -4.71 0.81 -5.816 0.00212 T 6.57 3.50 1.879 0.11902
The estimated coefficient for aa (intercept) suggests that
Select one:
a. If PP and TT are zero, we could still expect about $1,936 in sales per month.
b. aa cannot be interpreted with confidence since its parameter estimate is not statistically significant.
c. Sales will range between $309 and $1,936 per month, but not outside those limits.
d. Sales will be $1,936 per month when PP and TT are at their optimal values.
The estimated coefficient for bb (price of the Drift W1) suggests that
Select one:
a. a $1 increase in the price of the Drift W1 is associated with a decrease of monthly sales of $4.71.
b. monthly sales will increase by $5.816 if the price of the Drift W1 decreases by $4.71.
c. a one-dollar increase in price is associated with an increase in monthly sales of 4.71 units.
d. when price is close to $212, then consumers will demand one more unit per month if price drops by $4.71.
The estimated coefficient for cc (daily average summer temperature) suggests that
Select one:
a. a one-degree increase in temperature is associated with a $3.50 increase in monthly sales.
b. temperature has a more important effect on our sales than does the price of our units, since c>bc>b.
c. a one-degree increase in temperature is associated with a $119.02 increase in price.
d. a one-degree increase in temperature is associated with a $6.57 increase in monthly sales.
The price of the Drift W1 has a statistically significant effect on our sales.
Select one:
True
False
Daily average summer temperature affects the sales of the Drift W1 in a statistically significant way.
Select one:
True
False
What portion of the total variation in sales of the Drift W1 remains unexplained?
Select one:
a. 0.872, or 87.2%
b. 0.180, or 18.0%
c. 0.00153, or 0.153%
d. 0.051, or 5.1%
Segway is considering selling the Drift W1 in a new city, where the average daily summer temperature is 73°, for a price of $320. What level of sales would you expect in this new city (rounded to the nearest dollar)?
Answer:
You work for Segway, in the sales division of the Drift W1 (which are basically motorized roller skates). Youâve traveled into the future (since they arenât available yet) and collected data on monthly sales (S) and the price of the Drift W1 (P), both in dollars, as well as the daily average summer temperature in your most popular market (T) in degrees Fahrenheit. You estimate the following regression model: S=a+bP+cT In your regressions, you usually look for a 10%-or-better level of confidence.
The expected sign of
Select one:
a. b is negative and c is positive.
b. b is negative and c is negative.
c. b is positive and c is positive.
d. b is positive and c is negative.
Your regression yields the following results:
Dep. Var.: S
Adj. R-square 0.820
| Variable | Coefficient | Standard Error | t-stat | P-value |
|---|---|---|---|---|
| Intercept | 1936 | 309 | 6.259 | 0.00153 |
| P | -4.71 | 0.81 | -5.816 | 0.00212 |
| T | 6.57 | 3.50 | 1.879 | 0.11902 |
The estimated coefficient for aa (intercept) suggests that
Select one:
a. If PP and TT are zero, we could still expect about $1,936 in sales per month.
b. aa cannot be interpreted with confidence since its parameter estimate is not statistically significant.
c. Sales will range between $309 and $1,936 per month, but not outside those limits.
d. Sales will be $1,936 per month when PP and TT are at their optimal values.
The estimated coefficient for bb (price of the Drift W1) suggests that
Select one:
a. a $1 increase in the price of the Drift W1 is associated with a decrease of monthly sales of $4.71.
b. monthly sales will increase by $5.816 if the price of the Drift W1 decreases by $4.71.
c. a one-dollar increase in price is associated with an increase in monthly sales of 4.71 units.
d. when price is close to $212, then consumers will demand one more unit per month if price drops by $4.71.
The estimated coefficient for cc (daily average summer temperature) suggests that
Select one:
a. a one-degree increase in temperature is associated with a $3.50 increase in monthly sales.
b. temperature has a more important effect on our sales than does the price of our units, since c>bc>b.
c. a one-degree increase in temperature is associated with a $119.02 increase in price.
d. a one-degree increase in temperature is associated with a $6.57 increase in monthly sales.
The price of the Drift W1 has a statistically significant effect on our sales.
Select one:
True
False
Daily average summer temperature affects the sales of the Drift W1 in a statistically significant way.
Select one:
True
False
What portion of the total variation in sales of the Drift W1 remains unexplained?
Select one:
a. 0.872, or 87.2%
b. 0.180, or 18.0%
c. 0.00153, or 0.153%
d. 0.051, or 5.1%
Segway is considering selling the Drift W1 in a new city, where the average daily summer temperature is 73°, for a price of $320. What level of sales would you expect in this new city (rounded to the nearest dollar)?
Answer:
